South
Carolina
(State
or other jurisdiction of incorporation)
|
57-0799315
(IRS
Employer Identification No.)
|
520
Gervais Street
Columbia,
South Carolina
(Address
of principal executive offices)
|
29201
(Zip
Code)
|
Class
Common
Stock, $2.50 par value
|
Outstanding
as of October 31, 2007
9,210,164
|
September
30,
|
December
31,
|
September
30,
|
||||||||||
2007
|
2006
|
2006
|
||||||||||
(Unaudited)
|
(Note
1)
|
(Unaudited)
|
||||||||||
ASSETS
|
||||||||||||
Cash
and cash equivalents:
|
||||||||||||
Cash
and due from banks
|
$ |
46,930
|
$ |
45,460
|
$ |
61,048
|
||||||
Interest-bearing
deposits with banks
|
2,831
|
2,946
|
12,931
|
|||||||||
Federal
funds sold and securities
|
||||||||||||
purchased
under agreements to resell
|
10,600
|
30,000
|
32,700
|
|||||||||
Total
cash and cash equivalents
|
60,361
|
78,406
|
106,679
|
|||||||||
Investment
securities:
|
||||||||||||
Securities
held to maturity
|
||||||||||||
(fair
value of $16,014, $18,271 and $14,506, respectively)
|
15,962
|
18,112
|
14,330
|
|||||||||
Securities
available for sale, at fair value
|
216,693
|
182,113
|
185,801
|
|||||||||
Other
investments
|
10,235
|
10,166
|
12,475
|
|||||||||
Total
investment securities
|
242,890
|
210,391
|
212,606
|
|||||||||
Loans
held for sale
|
13,921
|
23,236
|
22,624
|
|||||||||
Loans
|
1,842,230
|
1,760,860
|
1,682,257
|
|||||||||
Less
unearned income
|
(4 | ) | (30 | ) | (40 | ) | ||||||
Less
allowance for loan losses
|
(23,822 | ) | (22,668 | ) | (21,675 | ) | ||||||
Loans,
net
|
1,818,404
|
1,738,162
|
1,660,542
|
|||||||||
Premises
and equipment, net
|
52,504
|
48,904
|
47,969
|
|||||||||
Goodwill
|
32,313
|
32,313
|
32,313
|
|||||||||
Other
assets
|
46,850
|
47,001
|
36,317
|
|||||||||
Total
assets
|
$ |
2,267,243
|
$ |
2,178,413
|
$ |
2,119,050
|
||||||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||||||
Deposits:
|
||||||||||||
Noninterest-bearing
|
$ |
293,388
|
$ |
256,717
|
$ |
273,329
|
||||||
Interest-bearing
|
1,520,454
|
1,449,998
|
1,384,087
|
|||||||||
Total
deposits
|
1,813,842
|
1,706,715
|
1,657,416
|
|||||||||
Federal
funds purchased and securities
|
||||||||||||
sold
under agreements to repurchase
|
172,496
|
203,105
|
147,955
|
|||||||||
Other
borrowings
|
88,865
|
90,416
|
140,457
|
|||||||||
Other
liabilities
|
16,568
|
16,289
|
12,891
|
|||||||||
Total
liabilities
|
2,091,771
|
2,016,525
|
1,958,719
|
|||||||||
Shareholders'
equity:
|
||||||||||||
Common
stock - $2.50 par value; authorized 40,000,000 shares;
|
||||||||||||
9,201,820,
8,719,146 and 8,705,416 shares issued and outstanding
|
23,005
|
21,798
|
21,764
|
|||||||||
Surplus
|
108,367
|
92,099
|
91,559
|
|||||||||
Retained
earnings
|
46,923
|
51,508
|
48,233
|
|||||||||
Accumulated
other comprehensive loss
|
(2,823 | ) | (3,517 | ) | (1,225 | ) | ||||||
Total
shareholders' equity
|
175,472
|
161,888
|
160,331
|
|||||||||
Total
liabilities and shareholders' equity
|
$ |
2,267,243
|
$ |
2,178,413
|
$ |
2,119,050
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Interest
income:
|
||||||||||||||||
Loans,
including fees
|
$ |
35,242
|
$ |
31,267
|
$ |
102,348
|
$ |
88,211
|
||||||||
Investment
securities:
|
||||||||||||||||
Taxable
|
2,646
|
2,273
|
7,482
|
6,264
|
||||||||||||
Tax-exempt
|
308
|
303
|
951
|
865
|
||||||||||||
Federal
funds sold and securities
|
||||||||||||||||
purchased
under agreements to resell
|
498
|
168
|
1,567
|
825
|
||||||||||||
Deposits
with banks
|
83
|
74
|
165
|
158
|
||||||||||||
Total
interest income
|
38,777
|
34,085
|
112,513
|
96,323
|
||||||||||||
Interest
expense:
|
||||||||||||||||
Deposits
|
13,925
|
10,757
|
39,412
|
28,397
|
||||||||||||
Federal
funds purchased and securities
|
||||||||||||||||
sold
under agreements to repurchase
|
2,132
|
1,566
|
6,677
|
4,549
|
||||||||||||
Other
borrowings
|
1,322
|
1,984
|
4,820
|
5,658
|
||||||||||||
Total
interest expense
|
17,379
|
14,307
|
50,909
|
38,604
|
||||||||||||
Net
interest income:
|
||||||||||||||||
Net
interest income
|
21,398
|
19,778
|
61,604
|
57,719
|
||||||||||||
Provision
for loan losses
|
1,161
|
1,048
|
2,743
|
3,716
|
||||||||||||
Net
interest income after provision for loan losses
|
20,237
|
18,730
|
58,861
|
54,003
|
||||||||||||
Noninterest
income:
|
||||||||||||||||
Service
charges on deposit accounts
|
3,909
|
3,512
|
10,952
|
9,988
|
||||||||||||
Secondary
market mortgage fees
|
1,374
|
1,509
|
4,759
|
4,040
|
||||||||||||
Bankcard
services income
|
1,051
|
880
|
3,067
|
2,518
|
||||||||||||
Trust
and investment services income
|
697
|
556
|
1,971
|
1,573
|
||||||||||||
Securities
gains (losses), net
|
--
|
--
|
42
|
--
|
||||||||||||
Other
|
649
|
370
|
1,971
|
1,405
|
||||||||||||
Total
noninterest income
|
7,680
|
6,827
|
22,762
|
19,524
|
||||||||||||
Noninterest
expense:
|
||||||||||||||||
Salaries
and employee benefits
|
11,171
|
10,226
|
33,475
|
30,053
|
||||||||||||
Furniture
and equipment expense
|
1,369
|
1,181
|
3,963
|
3,505
|
||||||||||||
Net
occupancy expense
|
1,247
|
1,088
|
3,585
|
3,148
|
||||||||||||
Advertising
and marketing
|
985
|
747
|
2,432
|
2,182
|
||||||||||||
Professional
fees
|
513
|
519
|
1,522
|
1,507
|
||||||||||||
Amortization
|
215
|
204
|
641
|
602
|
||||||||||||
Other
|
3,809
|
3,646
|
11,379
|
9,734
|
||||||||||||
Total
noninterest expense
|
19,309
|
17,611
|
56,997
|
50,731
|
||||||||||||
Earnings:
|
||||||||||||||||
Income
before provision for income taxes
|
8,608
|
7,946
|
24,626
|
22,796
|
||||||||||||
Provision
for income taxes
|
2,966
|
2,686
|
8,203
|
7,749
|
||||||||||||
Net
income
|
$ |
5,642
|
$ |
5,260
|
$ |
16,423
|
$ |
15,047
|
||||||||
Earnings
per share:
|
||||||||||||||||
Basic
|
$ |
0.61
|
$ |
0.58
|
$ |
1.79
|
$ |
1.65
|
||||||||
Diluted
|
$ |
0.61
|
$ |
0.57
|
$ |
1.78
|
$ |
1.63
|
||||||||
Dividends
per share
|
$ |
0.17
|
$ |
0.17
|
$ |
0.51
|
$ |
0.51
|
||||||||
Weighted-average
common shares outstanding:
|
||||||||||||||||
Basic
|
9,201
|
9,134
|
9,190
|
9,118
|
||||||||||||
Diluted
|
9,212
|
9,235
|
9,221
|
9,208
|
Accumulated
|
||||||||||||||||||||||||
Other
|
||||||||||||||||||||||||
Common
Stock
|
Retained
|
Comprehensive
|
||||||||||||||||||||||
Shares
|
Amount
|
Surplus
|
Earnings
|
Loss
|
Total
|
|||||||||||||||||||
Balance,
December 31, 2005
|
8,644,883
|
$ |
21,612
|
$ |
90,481
|
$ |
37,614
|
$ | (1,304 | ) | $ |
148,403
|
||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||
Net
income
|
--
|
--
|
--
|
15,047
|
--
|
15,047
|
||||||||||||||||||
Change
in net unrealized gain on securities
|
||||||||||||||||||||||||
available
for sale, net of tax effects
|
--
|
--
|
--
|
--
|
79
|
79
|
||||||||||||||||||
Total
comprehensive income
|
15,126
|
|||||||||||||||||||||||
Cash
dividends declared at $.51 per share
|
--
|
--
|
--
|
(4,428 | ) |
--
|
(4,428 | ) | ||||||||||||||||
Stock
options exercised
|
36,437
|
91
|
570
|
--
|
--
|
661
|
||||||||||||||||||
Employee
stock purchases
|
6,422
|
16
|
170
|
--
|
--
|
186
|
||||||||||||||||||
Restricted
stock awards
|
27,835
|
70
|
(70 | ) |
--
|
--
|
--
|
|||||||||||||||||
Common
stock repurchased
|
(10,161 | ) | (25 | ) | (341 | ) |
--
|
--
|
(366 | ) | ||||||||||||||
Share-based
compensation expense
|
--
|
--
|
749
|
--
|
--
|
749
|
||||||||||||||||||
Balance,
September 30, 2006
|
8,705,416
|
$ |
21,764
|
$ |
91,559
|
$ |
48,233
|
$ | (1,225 | ) | $ |
160,331
|
||||||||||||
Balance,
December 31, 2006
|
8,719,146
|
$ |
21,798
|
$ |
92,099
|
$ |
51,508
|
$ | (3,517 | ) | $ |
161,888
|
||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||
Net
income
|
--
|
--
|
--
|
16,423
|
--
|
16,423
|
||||||||||||||||||
Change
in net unrealized gain on securities
|
||||||||||||||||||||||||
available
for sale, net of tax effects
|
--
|
--
|
--
|
--
|
694
|
694
|
||||||||||||||||||
Total
comprehensive income
|
17,117
|
|||||||||||||||||||||||
Cash
dividends declared at $.51 per share
|
--
|
--
|
--
|
(4,661 | ) |
--
|
(4,661 | ) | ||||||||||||||||
Stock
options exercised
|
7,451
|
20
|
125
|
--
|
--
|
145
|
||||||||||||||||||
Employee
stock purchases
|
9,577
|
23
|
325
|
--
|
--
|
348
|
||||||||||||||||||
Restricted
stock awards
|
32,356
|
81
|
(81 | ) |
--
|
--
|
--
|
|||||||||||||||||
Common
stock repurchased
|
(2,474 | ) | (6 | ) | (86 | ) |
--
|
--
|
(92 | ) | ||||||||||||||
Share-based
compensation expense
|
--
|
--
|
727
|
--
|
--
|
727
|
||||||||||||||||||
Common
stock dividend of 5%, record date, March 9, 2007
|
435,764
|
1,089
|
15,258
|
(16,347 | ) |
--
|
--
|
|||||||||||||||||
Balance,
September 30, 2007
|
9,201,820
|
$ |
23,005
|
$ |
108,367
|
$ |
46,923
|
$ | (2,823 | ) | $ |
175,472
|
Nine
Months Ended
|
||||||||
September
30,
|
||||||||
2007
|
2006
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ |
16,423
|
$ |
15,047
|
||||
Adjustments
to reconcile net income to net cash
|
||||||||
used
in operating activities:
|
||||||||
Depreciation
and amortization
|
3,148
|
2,387
|
||||||
Provision
for loan losses
|
2,743
|
3,716
|
||||||
Share-based
compensation expense
|
727
|
749
|
||||||
(Gain)
loss on disposal of premises and equipment
|
(8 | ) |
153
|
|||||
Net
accretion of investment securities
|
(149 | ) | (61 | ) | ||||
Net
change in loans held for sale
|
9,315
|
(9,663 | ) | |||||
Net
change in miscellaneous assets and liabilities
|
(653 | ) |
1,778
|
|||||
Net
cash provided by operating activities
|
31,546
|
14,106
|
||||||
Cash
flows from investing activities:
|
||||||||
Proceeds
from maturities and calls of investment securities held to
maturity
|
3,295
|
6,152
|
||||||
Proceeds
from maturities and calls of investment securities available
for
sale
|
27,079
|
18,636
|
||||||
Proceeds
from sales of other investment securities
|
4,502
|
2,331
|
||||||
Purchases
of investment securities held to maturity
|
(1,157 | ) | (2,309 | ) | ||||
Purchases
of investment securities available for sale
|
(60,337 | ) | (50,518 | ) | ||||
Purchases
of other investment securities
|
(4,571 | ) | (3,884 | ) | ||||
Net
increase in customer loans
|
(83,721 | ) | (148,923 | ) | ||||
Recoveries
of loans previously charged off
|
736
|
542
|
||||||
Purchases
of premises and equipment
|
(6,193 | ) | (7,131 | ) | ||||
Proceeds
from sale of premises and equipment
|
93
|
399
|
||||||
Net
cash used in investing activities
|
(120,274 | ) | (184,705 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Net
increase in deposits
|
107,127
|
184,127
|
||||||
Net
decrease in federal funds purchased and securities sold
under
|
||||||||
agreements
to repurchase and other short-term borrowings
|
(32,109 | ) | (2,708 | ) | ||||
Proceeds
from FHLB advances
|
155,000
|
40,000
|
||||||
Repayment
of FHLB advances
|
(155,075 | ) | (43,328 | ) | ||||
Common
stock issuance
|
348
|
186
|
||||||
Common
stock repurchased
|
(92 | ) | (366 | ) | ||||
Dividends
paid
|
(4,661 | ) | (4,428 | ) | ||||
Stock
options exercised
|
145
|
661
|
||||||
Net
cash provided by financing activities
|
70,683
|
174,144
|
||||||
Net
increase (decrease) in cash and cash equivalents
|
(18,045 | ) |
3,545
|
|||||
Cash
and cash equivalents at beginning of period
|
78,406
|
103,134
|
||||||
Cash
and cash equivalents at end of period
|
$ |
60,361
|
$ |
106,679
|
September
30,
|
December
31,
|
September
30,
|
||||||||||
(Dollars
in thousands)
|
2007
|
2006
|
2006
|
|||||||||
Real
estate:
|
||||||||||||
Commercial
|
$ |
928,044
|
$ |
835,892
|
$ |
782,680
|
||||||
Consumer
residential mortgage
|
233,851
|
238,672
|
230,016
|
|||||||||
Consumer
construction and development
|
189,075
|
196,285
|
195,795
|
|||||||||
Commercial
|
203,593
|
190,635
|
177,218
|
|||||||||
Firstline
|
136,538
|
144,910
|
143,496
|
|||||||||
Consumer
|
120,521
|
130,596
|
128,109
|
|||||||||
Other
loans
|
30,608
|
23,870
|
24,943
|
|||||||||
Total
loans
|
1,842,230
|
1,760,860
|
1,682,257
|
|||||||||
Less,
unearned income
|
(4 | ) | (30 | ) | (40 | ) | ||||||
Less,
allowance for loan losses
|
(23,822 | ) | (22,668 | ) | (21,675 | ) | ||||||
Loans,
net
|
$ |
1,818,404
|
$ |
1,738,162
|
$ |
1,660,542
|
September
30,
|
December
31,
|
September
30,
|
||||||||||
(Dollars
in thousands)
|
2007
|
2006
|
2006
|
|||||||||
Balance
at beginning of period
|
$ |
22,668
|
$ |
20,025
|
$ |
20,025
|
||||||
Loans
charged-off
|
(2,325 | ) | (3,438 | ) | (2,608 | ) | ||||||
Recoveries
of loans previously charged-off
|
736
|
813
|
542
|
|||||||||
Balance
before provision for loan losses
|
21,079
|
17,400
|
17,959
|
|||||||||
Provision
for loan losses
|
2,743
|
5,268
|
3,716
|
|||||||||
Balance
at end of period
|
$ |
23,822
|
$ |
22,668
|
$ |
21,675
|
September
30,
|
December
31,
|
September
30,
|
||||||||||
(Dollars
in thousands)
|
2007
|
2006
|
2006
|
|||||||||
Certificates
of deposit
|
$ |
833,050
|
$ |
793,540
|
$ |
720,878
|
||||||
Money
market accounts
|
544,759
|
579,398
|
584,312
|
|||||||||
Transaction
accounts
|
293,388
|
256,717
|
273,329
|
|||||||||
Savings
accounts
|
128,153
|
76,734
|
77,309
|
|||||||||
Other
|
14,492
|
326
|
1,588
|
|||||||||
$ |
1,813,842
|
$ |
1,706,715
|
$ |
1,657,416
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
(Dollars
in thousands)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Service
cost
|
$ |
167
|
$ |
156
|
$ |
500
|
$ |
468
|
||||||||
Interest
cost
|
231
|
205
|
692
|
617
|
||||||||||||
Expected
return on plan assets
|
(301 | ) | (276 | ) | (901 | ) | (829 | ) | ||||||||
Amortization
of prior service cost
|
(43 | ) | (43 | ) | (130 | ) | (130 | ) | ||||||||
Recognized
net actuarial loss
|
104
|
93
|
313
|
279
|
||||||||||||
Net
periodic pension expense
|
$ |
158
|
$ |
135
|
$ |
474
|
$ |
405
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
(Dollars
in thousands)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Basic
earnings per share:
|
||||||||||||||||
Net
income
|
$ |
5,642
|
$ |
5,260
|
$ |
16,423
|
$ |
15,047
|
||||||||
Weighted-average
basic shares
|
9,201,228
|
9,134,076
|
9,189,549
|
9,117,615
|
||||||||||||
Basic
earnings per share
|
$ |
0.61
|
$ |
0.58
|
$ |
1.79
|
$ |
1.65
|
||||||||
Diluted
earnings per share:
|
||||||||||||||||
Net
income
|
$ |
5,642
|
$ |
5,260
|
$ |
16,423
|
$ |
15,047
|
||||||||
Weighted-average
basic shares
|
9,201,228
|
9,134,076
|
9,189,549
|
9,117,615
|
||||||||||||
Effect
of dilutive stock options
|
11,128
|
101,106
|
31,739
|
90,054
|
||||||||||||
Weighted-average
dilutive shares
|
9,212,356
|
9,235,182
|
9,221,288
|
9,207,669
|
||||||||||||
Diluted
earnings per share
|
$ |
0.61
|
$ |
0.57
|
$ |
1.78
|
$ |
1.63
|
Weighted-
|
||||||||
Average
|
||||||||
Number
of
|
Exercise
|
|||||||
Options
|
Shares
|
Price
|
||||||
Outstanding
at January 1, 2007
|
308,368
|
$ |
24.26
|
|||||
Granted
|
41,445
|
39.25
|
||||||
Exercised
|
(7,585 | ) |
18.94
|
|||||
Expired/Forfeited
|
(353 | ) |
28.99
|
|||||
Outstanding
at September 30, 2007
|
341,875
|
26.19
|
||||||
Exercisable
at September 30, 2007
|
248,231
|
23.21
|
||||||
Weighted-average
fair value of
|
||||||||
options
granted during the year
|
$ |
9.25
|
Nine
Months Ended
|
||||||||
September
30,
|
||||||||
2007
|
2006
|
|||||||
Dividend
yield
|
1.88%
|
2.15%
|
||||||
Expected
life
|
7
years
|
10
years
|
||||||
Expected
volatility
|
18%
|
19%
|
||||||
Risk-free
interest rate
|
4.65%
|
4.71%
|
Weighted-
|
||||||||
Average
|
||||||||
Grant-Date
|
||||||||
Restricted
Stock
|
Shares
|
Fair
Value
|
||||||
Nonvested
at January 1, 2007
|
50,883
|
$ |
27.32
|
|||||
Granted
|
33,527
|
37.73
|
||||||
Vested
|
(14,043 | ) |
26.30
|
|||||
Forfeited
|
(44 | ) |
27.29
|
|||||
Nonvested
at September 30, 2007
|
70,323
|
31.80
|
|
·
|
Consolidated
net income increased 7.3% to $5.6 million from $5.3 million in
the third
quarter of 2006.
|
|
·
|
Diluted
earnings per share increased 7.5% to $0.61 from $0.57 for the same
period
last year.
|
|
·
|
A
12.5% increase in noninterest income and increases in earning assets
led
to higher consolidated net income for the third quarter of
2007.
|
|
·
|
We
experienced a slight decrease of 1 basis point in return on average
assets
and a 15 basis point decrease in return on average equity compared
to
September 30, 2006. Return on average tangible equity decreased
both on a quarter-to-quarter comparison and on a year-to-date
comparison. The decrease resulted from a smaller change in net
unrealized loss on securities available for sale, net of tax, for
the
period compared to the prior period in 2006 which caused average
equity to
increase faster than net
income.
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
Selected
Figures and Ratios
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Return
on average assets (annualized)
|
1.00 | % | 1.01 | % | 0.98 | % | 0.99 | % | ||||||||
Return
on average equity (annualized)
|
13.13 | % | 13.28 | % | 13.04 | % | 13.11 | % | ||||||||
Return
on average tangible equity (annualized)
|
16.52 | % | 17.22 | % | 16.53 | % | 17.12 | % | ||||||||
Average
shareholders' equity (in thousands)
|
$ |
172,421
|
$ |
157,117
|
$ |
168,345
|
$ |
153,506
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
(Dollars
in thousands)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Non-TE
net interest income
|
$ |
21,398
|
$ |
19,778
|
$ |
61,604
|
$ |
57,719
|
||||||||
Non-TE
yield on interest-earning assets
|
7.30 | % | 7.07 | % | 7.23 | % | 6.89 | % | ||||||||
Non-TE
rate on interest-bearing liabilities
|
3.87 | % | 3.54 | % | 3.84 | % | 3.24 | % | ||||||||
Non-TE
net interest margin
|
4.03 | % | 4.10 | % | 3.96 | % | 4.13 | % | ||||||||
TE
net interest margin
|
4.06 | % | 4.14 | % | 4.00 | % | 4.17 | % |
|
·
|
Average
earning assets increased 10.1% to $2.1 billion in the third quarter
compared to the same period last year. The increase is
primarily reflected within commercial real estate loans and commercial
and
industrial loans.
|
|
·
|
Non-taxable
equivalent yield on interest-earning assets for the third quarter
of 2007
increased 23 basis points from the comparable period in 2006, and
by 34
basis points for the nine months ended September 30, 2007 compared
to the
comparable period in 2006. The yield on a portion of our
earning assets adjusts simultaneously, but to varying degrees of
magnitude, with changes in the general level of interest
rates.
|
|
·
|
The
average cost of interest-bearing liabilities for the third quarter
of 2007
increased 33 basis points from the same period in 2006, and by
60 basis
points on a year-to-date basis comparing 2007 to 2006. This is
a reflection of the impact of rising rates on the banks’ sources of
funding and continued competitive deposit pricing in selected products
and
markets. Increases in rates paid on certificates of deposit,
money market deposits, and federal funds purchased primarily drove
the
increase in the cost of interest-bearing
liabilities.
|
|
·
|
Tax
equivalent net interest margin at September 30, 2007 was 4.06%,
compared
to 3.99% at June 30, 2007, or 7 basis points higher. Compared
to prior year’s third quarter, TE net interest margin compressed by 8
basis points.
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
(Dollars
in thousands)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Average
total loans
|
$ |
1,810,332
|
$ |
1,661,679
|
$ |
1,786,887
|
$ |
1,622,090
|
||||||||
Interest
income on total loans
|
34,950
|
31,018
|
101,283
|
87,480
|
||||||||||||
Non-TE
yield
|
7.66 | % | 7.41 | % | 7.58 | % | 7.21 | % |
|
·
|
Average
total loans increased 8.9% leading to a mostly volume-driven
increase in
interest income. We experienced more fixed rate loan production
which we primarily sold through the secondary market. As a
result, our secondary market mortgage fees increased while our
total loans
grew more slowly than in prior
quarters.
|
|
·
|
Commercial
real estate loans (including owner occupied commercial real estate)
increased 18.6% to $928.0 million from the amount at September
30,
2006.
|
|
·
|
Commercial
non-real estate loans increased 14.9% to $203.6 million from
the amount at
September 30, 2006.
|
|
·
|
Our
non-taxable equivalent yield increased by 25 basis points compared
to the
yield for the third quarter of 2006, and 37 basis points for
the nine
months ended September 30, 2006.
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
(Dollars
in thousands)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Average
investment securities
|
$ |
232,797
|
$ |
212,367
|
$ |
224,857
|
$ |
202,375
|
||||||||
Interest
income on investment securities
|
2,954
|
2,576
|
8,433
|
7,129
|
||||||||||||
Non-TE
yield
|
5.03 | % | 4.81 | % | 5.01 | % | 4.71 | % |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
(Dollars
in thousands)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Average
interest-bearing liabilities
|
$ |
1,782,911
|
$ |
1,622,970
|
$ |
1,771,419
|
$ |
1,592,352
|
||||||||
Interest
expense
|
17,379
|
14,307
|
50,909
|
38,604
|
||||||||||||
Average
rate
|
3.87 | % | 3.54 | % | 3.84 | % | 3.24 | % |
|
·
|
Average
interest-bearing deposits for the three months ended September
30, 2007
grew 12.1% as compared to the same period in 2006, while on a year-to-date
basis the increase was 12.0%.
|
|
·
|
Interest-bearing
deposits grew 9.9% to $1.5 billion at September 30, 2007 from the
period
end balance at September 30, 2006 and increased $70.5 million or
6.5%
annualized from the balance at December 31,
2006.
|
|
·
|
Average
federal funds purchased and securities sold under agreements to
repurchase
increased 32.3%, up $46.1 million from the average balance in the
third
quarter of 2006. On a year-to-date basis, the increase was
32.2%, or $48.1 million. The Federal Reserve has lowered the
federal funds rate to 4.75%.
|
|
·
|
Average
CDs increased $123.5 million causing interest expense to increase
by $2.4
million for the third quarter of 2007 compared to the third quarter
of
2006. On a year-to-date basis, average CDs increased $126.7
million and interest expense increased $8.5
million.
|
|
·
|
On
a
linked-quarter basis, interest expense on average interest-bearing
liabilities increased $415,000 driven substantially by a $46.0
million
higher average balance of CDs along with a slight 2 basis point
increase
in the average rate. Additionally, a $19.7 million increase in
the average balances of savings deposits with a 47 basis point
increase in
the average rate drove the increase in interest
expense. However, the additional funding through CDs and
savings deposits allowed us to decrease other higher cost borrowings
by
$30.2 million, or 24.7%.
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
(Dollars
in thousands)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Balance
at beginning of period
|
$ |
23,369
|
$ |
21,214
|
$ |
22,668
|
$ |
20,025
|
||||||||
Loans
charged-off
|
(912 | ) | (788 | ) | (2,325 | ) | (2,608 | ) | ||||||||
Recoveries
|
204
|
201
|
736
|
542
|
||||||||||||
Net
charge-offs
|
(708 | ) | (587 | ) | (1,589 | ) | (2,066 | ) | ||||||||
Provision
for loan losses
|
1,161
|
1,048
|
2,743
|
3,716
|
||||||||||||
Balance
at end of period
|
$ |
23,822
|
$ |
21,675
|
$ |
23,822
|
$ |
21,675
|
||||||||
Total
loans:
|
||||||||||||||||
At
period end
|
$ |
1,842,226
|
$ |
1,682,217
|
$ |
1,842,226
|
$ |
1,682,217
|
||||||||
Average
|
1,810,332
|
1,661,679
|
1,786,887
|
1,622,090
|
||||||||||||
As
a
percentage of average loans (annualized):
|
||||||||||||||||
Net
charge-offs
|
0.16 | % | 0.14 | % | 0.12 | % | 0.17 | % | ||||||||
Provision
for loan losses
|
0.26 | % | 0.25 | % | 0.21 | % | 0.31 | % | ||||||||
Allowance
as a percentage of period end loans
|
1.29 | % | 1.29 | % | 1.29 | % | 1.29 | % | ||||||||
Allowance
as a percentage of period end
|
||||||||||||||||
non-performing
loans ("NPLs")
|
494.75 | % | 526.74 | % | 494.75 | % | 526.74 | % |
September
30,
|
December
31,
|
September
30,
|
||||||||||
(Dollars
in thousands)
|
2007
|
2006
|
2006
|
|||||||||
Non
accrual loans
|
$ |
4,008
|
$ |
3,567
|
$ |
2,558
|
||||||
Accruing
loans past due 90 days or more
|
807
|
1,039
|
1,557
|
|||||||||
Total
nonperforming loans
|
4,815
|
4,606
|
4,115
|
|||||||||
Other
real estate owned ("OREO")
|
443
|
597
|
363
|
|||||||||
Other
nonperforming assets
|
237
|
--
|
--
|
|||||||||
Total
nonperforming assets
|
$ |
5,495
|
$ |
5,203
|
$ |
4,478
|
||||||
Total
NPLs as a % of total loans
|
0.26 | % | 0.26 | % | 0.24 | % | ||||||
Total
NPAs as a % of total loans and OREO
|
0.30 | % | 0.30 | % | 0.27 | % | ||||||
Total
NPAs as a % of total assets
|
0.24 | % | 0.21 | % | 0.19 | % |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
(Dollars
in thousands)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Service
charges on deposit accounts
|
$ |
3,909
|
$ |
3,512
|
$ |
10,952
|
$ |
9,988
|
||||||||
Secondary
market mortgage fees
|
1,374
|
1,509
|
4,759
|
4,040
|
||||||||||||
Bankcard
services income
|
1,051
|
880
|
3,067
|
2,518
|
||||||||||||
Trust
and investment services income
|
697
|
556
|
1,971
|
1,573
|
||||||||||||
Securities
gains (losses), net
|
--
|
--
|
42
|
--
|
||||||||||||
Other
|
649
|
370
|
1,971
|
1,405
|
||||||||||||
Total
noninterest income
|
$ |
7,680
|
$ |
6,827
|
$ |
22,762
|
$ |
19,524
|
|
·
|
Service
charges on deposit accounts increased 11.3%, driven by growth
in total
deposits during the quarter.
|
|
·
|
Secondary
market mortgage fees decreased 8.9%. While mortgage production
for the quarter remained relatively in line compared to the third
quarter
of 2006, secondary market mortgage fees decreased as a result
of the
current market conditions.
|
|
·
|
Bankcard
services income increased 19.4%, driven by organic growth in
deposit
accounts and more customers using SCBT debit cards. We
experienced a 35.6% increase in debit card income, a 45.7% increase
in
foreign ATM fees, and a 40.7% increase in credit card transaction
fees.
|
|
·
|
Trust
and investment services income increased 25.4%, driven by improving
branch
and line of business referral activity, expansion of existing
business,
and increased productivity of existing investment
consultants.
|
|
·
|
Other
noninterest income increased 75.4%, which largely reflected a
$141,000
increase in the cash surrender value of bank owned life insurance
and a
loss on the sale of fixed assts of $141,000 in the third quarter
of
2006.
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
(Dollars
in thousands)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Salaries
and employee benefits
|
$ |
11,171
|
$ |
10,226
|
$ |
33,475
|
$ |
30,053
|
||||||||
Furniture
and equipment
|
1,369
|
1,181
|
3,963
|
3,505
|
||||||||||||
Net
occupancy expense
|
1,247
|
1,088
|
3,585
|
3,148
|
||||||||||||
Information
services expense
|
1,050
|
945
|
3,162
|
2,734
|
||||||||||||
Advertising
and marketing
|
985
|
747
|
2,432
|
2,182
|
||||||||||||
Business
development and staff related
|
512
|
397
|
1,625
|
1,271
|
||||||||||||
Professional
fees
|
513
|
519
|
1,522
|
1,507
|
||||||||||||
Amortization
|
215
|
204
|
641
|
602
|
||||||||||||
Other
|
2,247
|
2,304
|
6,592
|
5,729
|
||||||||||||
Total
noninterest expense
|
$ |
19,309
|
$ |
17,611
|
$ |
56,997
|
$ |
50,731
|
|
·
|
Salaries
and commissions expense increased 9.2%, driven by sales volume
incentives
paid to employees on certain banking products, an increase in employees
as
a result of organic growth, and the addition of six full-service
locations
since June 30, 2006. These locations accounted for
approximately 25.1%, or $237,000, of the compensation increase
from the
quarter ended September 30, 2006. We expect that salaries and
commissions expense will continue to be driven largely by sales
volume
incentives and the additional personnel expense related to the
TSB
Financial Corporation acquisition.
|
|
·
|
Furniture
and equipment expense, net occupancy expense, and information services
expense increased 15.9%, 14.6%, and 11.1%, respectively, as a result
of
additional financial centers.
|
|
·
|
Business
development and staff related expense increased 29.0%, driven by
the
organic growth of our banks, leading to recruiting and placing
additional
staff.
|
|
·
|
Advertising
and public relations expense increased 31.9%, however on a year-to-date
basis this cost is 11.5% higher compared to the prior year. We
increased our advertising and public relations expense during the
third
quarter of 2007 with the opening of the new full-service location
in
Lexington in August 2007.
|
|
·
|
Other
noninterest expense decreased 2.5%, resulting mainly from a decrease
in
miscellaneous charge-offs and
recoveries.
|
Capital
Adequacy Ratios
|
September
30,
|
December
31,
|
September
30,
|
|||||||||
2007
|
2006
|
2006
|
||||||||||
Tier
1 risk-based capital
|
10.32 | % | 10.11 | % | 10.19 | % | ||||||
Total
risk-based capital
|
11.57 | % | 11.36 | % | 11.44 | % | ||||||
Tier
1 leverage
|
8.20 | % | 8.11 | % | 8.18 | % |
|
·
|
Emphasizing
relationship banking to new and existing customers, where borrowers
are
encouraged and normally expected to maintain deposit accounts with
our
banks,
|
|
·
|
Pricing
deposits, including certificates of deposit, at rate levels that
will
attract and/or retain balances of deposits that will enhance our
banks’
asset/liability management and net interest margin requirements,
and
|
|
·
|
Continually
working to identify and introduce new products that will attract
customers
or enhance our banks’ appeal as a primary provider of financial
services.
|
|
·
|
Credit
risk associated with an obligor’s failure to meet the
terms of any contract with the bank or otherwise fail to perform
as
agreed;
|
|
·
|
Interest
rate risk involving the effect of a change in interest
rates on both the bank’s earnings and the market value of the portfolio
equity;
|
|
·
|
Liquidity
risk affecting the bank’s ability to meet its
obligations when they come
due;
|
|
·
|
Price
risk focusing on changes in market factors that
may
affect the value of traded instruments in “mark-to-market”
portfolios;
|
|
·
|
Transaction
risk arising from problems with service or product
delivery;
|
|
·
|
Compliance
risk involving risk to earnings or capital resulting
from violations of or nonconformance with laws, rules, regulations,
prescribed practices, or ethical
standards;
|
|
·
|
Strategic
risk resulting from adverse business decisions or
improper implementation of business
decisions;
|
|
·
|
Reputation
risk that adversely affects earnings or capital
arising
from negative public opinion;
and
|
|
·
|
Terrorist
activities risk that result in loss of consumer
confidence and economic
disruptions.
|
Period
|
(a)
Total Number of Shares (or Units) Purchased
|
(b)
Average Price Paid per Share (or Unit)
|
(c)
Total Number of Shares (or Units) Purchased as Part of Publicly
Announced
Plans or Programs
|
(d)
Maximum Number (or Approximate Dollar Value) of Shares (or Units)
that May
Yet Be Purchased Under the Plans or Programs
|
||||||||||||
July
1 - July 31
|
--
|
$ |
--
|
--
|
147,872
|
|||||||||||
August
1 - August 31
|
--
|
--
|
--
|
147,872
|
||||||||||||
September
1 - September 30
|
--
|
--
|
--
|
147,872
|
||||||||||||
Total
|
--
|
--
|
147,872
|
Exhibit
31.1
|
Rule
13a-14(a) Certification of Principal Executive
Officer
|
Exhibit
31.2
|
Rule
13a-14(a) Certification of Principal Financial
Officer
|
Exhibit
32.1
|
Section
1350 Certification of Principal Executive
Officer
|
Exhibit
32.2
|
Section
1350 Certification of Principal Financial
Officer
|
SCBT
FINANCIAL CORPORATION
|
|||
(Registrant)
|
|||
Date: November
8, 2007
|
|
/s/
Robert R. Hill, Jr.
|
|
Robert
R. Hill, Jr.
|
|||
President
and Chief Executive Officer
|
|||
Date: November
8, 2007
|
|
/s/
John C. Pollok
|
|
John
C. Pollok
|
|||
Senior
Executive Vice President and
Chief
Financial Officer
|
|||
Date: November
8, 2007
|
|
/s/
Karen L. Dey
|
|
Karen
L. Dey
|
|||
Senior
Vice President and
Controller
(Principal Accounting Officer)
|
|||
Exhibit No. | Description |
Exhibit
31.1
|
Rule
13a-14(a) Certification of Principal Executive
Officer
|
Exhibit
31.2
|
Rule
13a-14(a) Certification of Principal Financial
Officer
|
Exhibit
32.1
|
Section
1350 Certification of Principal Executive
Officer
|
Exhibit
32.2
|
Section
1350 Certification of Principal Financial
Officer
|